- What is a loan?
A loan is money you borrow to buy or pay for something that you could not afford to pay for upfront. You are assuming that over time you will be able to pay the money back. You will also owe interest on the loan, which is calculated by the agreed upon interest rate. The terms of the interest rate will be explained to you at the time you borrow the money.
- What kinds of student loans are there?
Broadly speaking, there are two types of student loans -- federal direct loans and private loans. Under the Federal Loan umbrella, there are different loan programs. These programs are known by names such as Direct Stafford, Perkins, and PLUS. Private loans are not handled by the government, and do not adhere to government-set interest rates or terms.
- What is interest?
Interest is the amount you have to pay to borrow money. When you take out a loan, you will owe interest plus the original amount of the loan itself. The amount of interest owed is determined by the interest rate. The interest rate may be fixed, which means it does not change over time; or it may be variable, which means it fluctuates.
- What is the difference between interest and principal?
Interest is the amount you must pay in addition to the original amount of the loan. This original amount is known as the principal.
- How do I apply for federal loans?
How do I apply for federal loans? You need to complete the FAFSA to be considered for federal loans, such as the Subsidized and Unsubsidized Direct Stafford Loans. You should also complete a Master Promissory Note (MPN). The FAFSA can be found at: www.fafsa.gov The federal website for Direct Loans can be found at: www.studentloans.gov
- Do I have to accept the student loan on my Award Letter?
No, you do not. If you do not want the student loan on your award letter, you do not have to accept it. Also, if you do not want the full amount of the loan on your award letter, you can work with the Financial Aid Office to borrow a smaller amount. Remember, be prudent about how much you borrow. Borrow only what you need to attend school.
- If I accept my Stafford loan award, how will this affect other forms of student aid?
Accepting a Stafford loan that is included in your financial aid award package should not affect other types of aid you have been awarded.
- What happens to my Stafford loan if I do not attend school at least half-time?
The government pays the interest on a Subsidized Stafford loan as long as you are enrolled in school at least half-time or are in your grace period. Your loan will enter repayment six months after graduation or dropping below half-time status. Typically, a student who is taking 6 or more credits is considered half-time. It is important to check the enrollment status requirements at your school to be certain you are enrolled at least half-time.
- If I have already completed a Direct Loan MPN for another school, do I need to complete another one?
No, if you currently have a valid Direct Loan MPN on file, you do not need to complete a new MPN. To retrieve a copy of your MPN, go to studentloans.gov/myDirectLoan